Gold extends rally above $4,300 as dovish Fed bets boost demand

Gold (XAU/USD) prolongs its uptrend for the fourth straight day and climbs beyond the $4,300 mark, hitting a fresh high since October 21 during the first half of the European session on Friday. The US Dollar (USD) struggles to attract any meaningful buyers and remains close to a two-month low, touched on Thursday, amid the Federal Reserve's (Fed) dovish outlook. This, in turn, is seen as a key factor that continues to drive flows towards the non-yielding yellow metal.
Apart from this, stalled talks on the Russia-Ukraine peace deal keep geopolitical risks in play and turn out to be another factor that benefits the safe-haven Gold. The supporting factors, to a larger extent, offsets the risk-on mood and does little to hinder the safe-haven commodity's move higher. This, in turn, suggests that the path of least resistance for the bullion remains to the upside. Traders now look to speeches from influential FOMC members for short-term impetus heading into the weekend.
Daily Digest Market Movers: Gold bulls retain control as Fed rate cut bets keep USD on the defensive
The US Federal Reserve's dovish outlook dragged the US Dollar to an over two-month low and lifted the non-yielding Gold to its highest level since October 21 on Thursday. In a widely expected move, the US central bank lowered borrowing costs by 25 basis points on Wednesday and projected just one more rate cut in 2026.
Fed Chair Jerome Powell said during the post-meeting press conference that the US labor market has significant downside risks and that the central bank does not want its policy to push down on job creation. This fueled speculations about two more rate cuts by the Fed next year and, in turn, favors the XAU/USD bulls.
Meanwhile, Asian stocks tracked the overnight strength on Wall Street and advanced in early trade on Friday, which is seen undermining demand for the traditional safe-haven bullion. However, prospects for lower interest rates in the US, along with persistent geopolitical uncertainties, could lend support to the commodity.
Meanwhile, US President Donald Trump is extremely frustrated with Russia and Ukraine, and he doesn't want any more talk, his spokeswoman said on Thursday. Earlier, Ukrainian President Volodymyr Zelensky said that the US was pushing it to cede land to Russia as part of an agreement to end a nearly four-year war.
There isn't any relevant market-moving economic data due for release from the US on Friday, leaving the USD at the mercy of speeches from influential FOMC members. Apart from this, the broader risk sentiment could provide some impetus to the yellow metal, which remains on track to register strong weekly gains.
Gold builds on strength beyond $4,300 following a trading range breakout on Thursday
The overnight strong move up confirmed a fresh bullish breakout through a nearly two-week-old trading range hurdle, around the $4,245-4,250 region. Moreover, oscillators on the daily chart are holding in positive territory and are still away from being in the overbought zone, suggesting that the path of least resistance for the Gold price remains to the upside. Hence, any further pullback towards the aforementioned resistance breakpoint could be seen as a buying opportunity. This should limit losses for the XAU/USD pair near the $4,220-4,218 region, which is followed by the $4,200 mark and the $4,170-4,165 support area. A convincing break below the latter might shift the bias in favor of bearish traders and pave the way for deeper losses.